That’s why buying ready-made products is so harmful. It induces laziness and sloppy thinking. You become so bedazzled by the upsides that you forget about the downsides. But if you make the effort to see how/where they intend to profit and do a knock-off, then you gain both knowledge and, possibly, some fat profits.

I definitely agree with you on the use of the step-up interest rates to "bedazzle you by the upside." In my own quickie analysis, I don't see how you ever collect the 15%. The index has to pretty much tread water for 20 years. If one was bullish on Europe, one could put money in the notes and collect 7% for five years before the notes would be called. No one, however, is really bullish about Europe right now. It's questionable whether the Euro currency will continue to survive given the current problems of most European nations aside from Germany. So the question is does the index stagnate or does it begin to sink in the near future? Morgan Stanley is betting on the latter and I think they're right.

It's far better to stick with traditional products like stocks and bonds where the issuer's and investors' are more or less in line. Both want the underlying company or fund to go up in value. The adversarial relationship between issuer and investor when it comes to structured products is more like that between a Casino and its clients.

Oh well...the hunt for income goes on... Thanks to all who replied, especially Charlie! I appreciate candor!

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